As we enter peak rental season—rents typically begin to rise in early May and peak in July for New York, according to a report from RentHop—there's less and less room for negotiating your renewal lease. The good news is that rents have been stagnating in the past year, and landlord concessions have been on the rise, at least for higher-end new developments.
[Editor's note: An earlier version of this post was updated with new information in May 2018.]
"The bottom line is rent increases with market-rate tenants are usually negotiable," says Marina Higgins, director of leasing at Argo Real Estate, a company that manages around 8,000 apartments in Manhattan.
Here's what you need to know:
1. Understand where your landlord's coming from
When it comes to rent-stabilized apartments, landlords are allowed to raise the rent each year only by certain Rent Guidelines Board-approved increments. That's up to 1.25 percent for one-year leases, and 2 percent for two-year leases through September 30th, 2018. The board will vote on June 26th for increases affecting renewals from October 1st, 2018-September 30th, 2019.
Landlords can raise the rent as much as they like on market-rate apartments, however. When the rent-stabilized rates are frozen, as they were in recent years, or low, as they are now, landlords will be more aggressive with market-rate tenants, if they can be, says Arik Lifshitz, CEO of the family-founded DSA Property Group.
"Operating expenses have gone up tremendously year-over-year the past 15 years, mostly driven up by property taxes," he says, adding there also are plenty of ancillary charges, such as dealing with the Buildings Department, lawyers, and Airbnb.
Still, Lifshitz says, this year in particular is a good time to negotiate for a smaller increase, as landlords have had a tough time renting vacant apartments. Timing makes all the difference. In the recent down market, some landlords even reduced rents. But there was a dramatic shift in mid-April, Lifshitz says, and apartments are starting to rent more quickly. So lease renewals sent out before then, for May, June, and July—to comply with the 90-day renewal requirement—had less aggressive increases than those going out now for August and September.
Gross Rent Calculator
Some New York City landlords offer a free month (or more) at the beginning or end of a lease. The advertised rent is the net effective rent. The net effective rent is less than the amount you will actually have to pay --- known as your gross rent --- during your non-free months.
Brick Underground's Gross Rent Calculator enables you to easily calculate your gross rent, make quick apples-to-apples comparisons between apartments and avoid expensive surprises. All you'll need to figure out your gross rent is 1) the net effective rent, 2) the length of your lease, and 3) how many free months your landlord is offering. [Hint: Bookmark this page for easy reference!]
To learn more about net effective versus gross rents, read What does 'net effective rent' mean?.
If the landlord is offering partial months free, enter it with a decimal point. For example, 6 weeks free rent should be entered as 1.5 months.
2. Your track record matters
If you've been a good (read: quiet, non-controversial) tenant, and always pay your rent on time, you're much more likely to convince your landlord to ease up on a proposed increase.
"Generally, the landlord wants to keep you in the apartment," Higgins says. "It costs them a lot of money to change over an apartment—there can be renovation costs, time that an apartment sits empty and sometimes broker fees. So a good tenant is in a good position to negotiate their lease."
3. Stay calm, and ask politely
The old adage about catching more flies with honey is particularly true in lease negotiations.
"You want to be polite and respectful," says Gary Malin, president of Citi Habitats. "I think most times, it’s better to say 'I’ve been a tenant for X time, I’ve always paid rent on time. I wasn't expecting the rent increase to be this high. Is there anything more palatable?'"
It also doesn't hurt to mention how much you like the building, the management and the staff.
4. Do your research
See what comparable apartments are going for nearby (check borough-specific market reports and StreetEasy), and figure out whether you'll be paying more than market rate with the proposed increase. If you come armed with numbers, you can make a better case for yourself.
A lot of people think that telling their personal hardship is going to help, but it doesn't.
"If you go to your landlord and say you didn't get a bonus this year and spent all your money already so you shouldn't get a rent increase, they'll come back with, 'What about my situation? I have a mortgage,'" says Charlie Panoff, an agent at Triplemint (a Brick Underground sponsor, FYI). "The landlord doesn't care about you. They care about the market and the property. Just make it about the numbers, not yourself."
But keep in mind that new upgrades to the building and to the neighborhood can increase the cost and asking price. Often, rental values are fluid.
5. Talk to your neighbors
Jennifer C., a Gramercy renter who negotiated her rent increase down almost 50 percent, found out that her neighbors with a similarly sized apartment were offered an incentive for booking early.
"We were not offered that, so I leveraged it," she says.
This can also occasionally work for rent-stabilized apartments. One year, Panoff saw a similar apartment in his building going for hundreds of dollars less than his rent-stabilized place. He told the landlord he would apply for the other apartment in order to save money.
"It went back and forth and eventually they conceded and gave me the same [lower] rate," he says.
6. Small landlords may be more willing to negotiate
"Really large ones use yield management software, but some of the rest are willing to negotiate," a small landlord told us.
7. Price negotiation is usually less successful than asking for upgrades
You might not get a lower increase, but you can get new appliances. Panoff had a landlord who didn't raise the rent one year, but wanted to increase it by $150 a month the next. He negotiated it down to $100 and got a bathroom renovation out of it.
"The bathroom would pay for itself if we stayed or if we moved out, and we were willing to pay more to have something a little nicer," he says.
"If you’ve been making complaints about things in your apartment, it never hurts to mention that when it’s time to renew the lease," Malin says.
This would be a good time to remind management about anything that may have gone wrong in the building, Panoff says, like if the elevator renovation took 12 weeks instead of the four they said it would.
"But I would strongly recommend not combining lease renewal conversation with a list of necessary improvements. It's more likely to become a tense conversation that way," Higgins adds.
8. Just ask
"Especially this year, where landlords have had a rough time,"Lifshitz says. "If you don't ask, you'll never know. But be reasonable. Don't ask for a reduction if everyone else's rent is going up."
Some agents say an email or phone call will suffice.
"I generally do the bulk of our discussions by phone," says Argo's Higgins. "Email is great for memorializing conversations, but the paper trail is not really necessary because it will all be in the lease document."
If you don't get a response from either of those methods, Panoff recommends going in person to pay the next month's rent and then asking for a reduced increase.
"To most landlords, a tenant is just a number," he says. "But if you go in person and add a human element to it, the landlord may say, 'This is a nice person,' and raise the rent only $25 instead of $100. No one is ever upset when you're handing them money."
9. If they raise the rent, at least ask for a two-year lease
This way you can lock in the price for an extra year and avoid going through this again in 12 months. Not all landlords will go for this, especially if rents are starting to recover. But it can't hurt to try.
You Might Also Like